TMI Blog2012 (5) TMI 396X X X X Extracts X X X X X X X X Extracts X X X X ..... a, Judicial Member This appeal has been filed by the assessee against the order dated 3-11-2010, passed by CIT(A)-1, Mumbai for the quantum of assessment passed under Section 143(3) for the assessment year 2007-2008. In the concise grounds of appeal, the assessee has raised following two grounds :- 1. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in upholding the disallowance of Rs.3,06,457/- u/s 40(a(ia) disregarding the fact that the appellant's income is computed u/s 11 of the Act to which provisions of S.40(a)(ia) do not apply. 2. On the facts and in the circumstances of the case and in law, the learned CIT(A) has sustained the addition made by the Assessing Officer that the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payments on the ground that TDS under Section 194J have not been deducted and added to total income of the assessee. 4. Before the CIT(A), the assessee's contention was that the provision of Section 40(a)(ia) are not applicable in the case of the assessee's trust as the expenditure in a case of a trust has to be seen from the point of view of application of income for a charitable purposes. However, the CIT(A) did not find any merit in the said contention of the assessee and held that Section 40(a)(ia) is applicable in the assessee's case and addition on account of non-deduction of TDS is justified. 5. Learned AR appearing on behalf of the assessee submitted before us that the assessee is a trust which is registered under Section 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Now, let us examine Section 11 and Section 40 to decide this controversy. Section 11 to 13 is a part of Chapter 3 under the heading "Income which does not form the part of the total income". Section 11 (1) provides that "subject to the provisions of Section 60 to 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income". Thereafter it is provided as to how the income and to what extent it can be applied for charitable purposes. The manner in which the income can be applied has been laid down in Section 11(1) to Section 11(5). Section 13 provides exception to Section 11 wherein such an income can be excluded from the exempt income of the trust. Thus, Section 11 to 13 pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ption of income of a charitable trust under Section 11. The disallowance made under Section 40(a) will only go to enhance the business profit of an assessee whose income is assessable under section 28 and not otherwise. Hence, provisions of section 40(a) are not applicable in case of charitable trust or institution where income and expenditure is computed in terms of section 11. 8 . Accordingly, we do not find any merit in the orders passed by the Assessing Officer as well as by the CIT(A) and delete the disallowance made under Section 40(a)(ia) on account of non-deduction of TDS for sum of Rs.3,06,457/- and the Ground No.1 as raised by the assessee stands allowed. 9 . In the result, appeal filed by the assessee is partly allowed. - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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